Corporate Finance

An introduction to the finance function and financial management of the firm, including techniques of financial analysis, working capital management, capital budgeting, the acquisition and management of corporate capital, and dividend policy. Analysis of how the financial manager influences the decision-making process within the firm.

NOTE: The information below is representative of the course and is subject to change. The specific details of the course will be available in the Desire2Learn course instance for the course in which a student registers.

Additional Information

Learning Outcomes
Upon completion of this course, you should be able to

Understand basic terminology of finance.

Calculate time value of money problems.

Identify the determinants of interest rates.

Analyze a firm using ratio analysis.

Calculate the intrinsic value of a stock and a bond.

Explain the risk/return relationship.

Understand the capital budgeting process.

Estimate the cash flows associated with a new project.

Estimate the amount of external funds required given a sales growth estimate.

Unit DescriptionsCourse Organization and Assignment Descriptions

Unit 1Overview
Financial management involves the acquisition and utilization of funds and assets such that long-term shareholder wealth is maximized. As we have seen in the recent past, poor financial management can have severe adverse effects not only for shareholders but for other stakeholders such as employees, retirees, suppliers, customers, and in some cases, it can impact the entire industry and economy. There is a boom in entrepreneurship as talented employees realize that they would rather be self-employed. Whether you are a stakeholder or self-employed, having a basic knowledge of financial management is important. Lastly, some of the financial management tools and techniques we will be learning about in this course can also be applied to personal financial planning.

Unit 2Overview
Financial managers raise money in capital markets by issuing common stock, preferred stock, or bonds. In this unit, we will learn how to value these financial assets, about the financial markets in which these assets are traded and how to select stocks based on their risk-return tradeoff. The current level of interest rates can affect the decision of the corporation to either raise money by issuing bonds or selling stock. Interest rates have been very low for an unprecedented amount of time and it is important to realize that this is an anomaly and is unlikely to continue in upcoming years.

Unit 3Overview
In this unit we learn how to perform three of a financial manager's most important responsibilities: determine what it costs to raise capital, how to allocate the capital it has raised, and finally, how to estimate cash flows from a potential project. In sum, these responsibilities are called capital budgeting. The weighted average cost of capital (WACC) is how we determine what it costs the firm to raise money. The capital budgeting tools (NPV, MIRR, IRR, payback and discounted payback) are the tools we use to assess whether or not projects should be accepted. Cash flow estimation is most easily learned if we subdivide the problem into three smaller problems.

Unit 4Overview
Unit 4 contains dividend policy, working capital management, and financial planning and forecasting. Each of these specific skills is very important. We will first learn how dividends, stock splits, and stock repurchases affect investors. Working capital is simply the current assets the firm has in place. In practice, the management of working capital is the time-consuming part of the financial manager's responsibilities. Holding too many current assets is a drain on the profitability of the firm. However, running short of current assets can be problematic as well, potentially even catastrophic. In part, managerial conservatism or aggressiveness, among other factors, plays a part in the manager's choice of how much working capital the firm holds. Lastly, financial planning and forecasting is a very important aspect of financial management because it estimates how much capital the firm will need to raise externally given a sales growth estimate. If the firm has limited access to capital markets, then it should limit its sales growth to that level which can be funded with internal capital. Each of these three topics focuses on a different but important aspect of financial management.

Grading Criteria for Activities

Assignment

Possible Points

Unit Exams (1 @ 40 pts, 3 @ 100 pts. each)

340 points

Discussions (6 @ 5 pts. each)

30 points

Individual Assignments (2 @ 20 pts. each)

40 points

Group Assignment

20 points

Graduate Paper

20 points

Total:

460 points

Grading Scale

A

90% - 100%

B

80% - 89%

C

70% - 79%

D

60% - 69%

F

0% - 59%

The following resources provide additional review and practice materials for mathematical concepts: